- 3.1 ICP 501: Industry profiles and impediments to growth for emerging industries, with emphasis on post-farmgate activity
- 3.2 ICP 502: Modelling future wood supply from New Zealand's planted production forests
- 3.3 ICP 506: An understanding of current farm performance variations for Mäori-owned and non Mäori-owned farming business
- 3.4 ICP 440: Impact of agricultural change on rural communities - phase 2
- 3.5 ICP 442: Debt & debt servicing
- 3.6 ICP 443: East Coast North Island Farm business survey
3. Promoting Industry & Rural Community Performance
3.1 ICP 501: Industry profiles and impediments to growth for emerging industries, with emphasis on post-farmgate activity
| Programme Title: | Industry profiles and impediments to growth for emerging industries, with emphasis on post-farmgate activity |
| Programme Leader: | Glen Greer / John Greer |
| Institution: | Lincoln University |
Summary
Profiles of sixteen emerging industries were compiled from information obtained largely from secondary data sources. Profiles included information on the history of industry development and its present structure, processing, marketing and quality assurance, market development and research and development, and industry governance and its regulatory framework.
Eight of these industries were selected for more in-depth study in the second phase of the study. They were the avocado, calla, cherry, Satsuma mandarin, olive, organic meat, organic processed vegetables and persimmon industries.
A model of industry development was proposed that was based on the theory of product lifecycle, commonly used in marketing. It postulated five stage of industry development and defined the characteristics that may be expected of industries in each stage. The stages defined were development, initial growth, growth, maturity and decline.
A number of characteristics of the individual industry will influence the rate of development or final size of an emerging industry. They included the nature of the market and production technologies, the sources and drivers of innovation, the leadership of the industry and the policy environment in which it develops. In addition, 12 factors expected to influence the form of the industry lifecycle and the industry development process were defined and used as a basis for evaluating the stage of maturity and impediments to development of the industries selected.
The industry analysis generally supported both the model of development and the relevance of the factors as indicators of the rate of industry development. However, it was found that industries do not always proceed smoothly through the stages of development and may be at significantly different stages with respect to each of the factors, depending on the external influences and starting conditions.
A number of factors studied were the source of impediments to development common to several industries and some may warrant review in a policy framework. They include:
- Aspects of the production system continue to impede development in most of the industries studied. The results of the study suggest that further research, technology transfer and skills development would improve export production in a number of industries, and that the issues of research funding, the provision of research services and the ownership of intellectual property for emerging industries may warrant review by government.
- A number of industries acknowledge that more market development will be required and that they will have difficulty funding this activity. While the nature of market development undertaken by industries may be outside the policy framework, funding such activity is assisted by many governments internationally, and funding mechanisms may be an issue for investigation in this context. Perhaps more importantly, and more directly relevant to Government policy, the costs to industry of developing export market protocols are a heavy burden for smaller industries.
- Although the issue of disposal markets for second grade product is of relevance to several of the industries studied, it is likely to be resolved by research and market development.
- The study has found that while industries are very young and lack production bases from which to generate industry funds, lack of resources constrains the development of industry organisations at the outset. Preparing applications for research funding, HEA membership and commodity levies is expensive in terms of time and expertise and the lack of sound industry information is common to industries in the early stages. The provision of instruments such as those used to assist business and network formation in other sectors (e.g. secretariat services and/or better information on governance structures and other issues to emerging industries) may lead to better resource allocation during early development.
Background
The goal of the project is to obtain and analyse information on the structures, impediments to growth and strategies for overcoming those impediments of emerging industries, with emphasis on post-farmgate aspects.
Accurate information on processes from farm-gate to export, inputs, outputs, what and how much is processed, capital structures and availability, industry governance and impediments is not easily accessible, even for many established industries. Little or no information is available on many emerging industries. The impact of why and how emerging land-based industries evolve and organise themselves is not well understood.
Such information is required by MAF in order to better understand the drivers of, and the impediments to, change in emerging industries and to facilitate ministerial and staff discussions with industry.
Approach & Outcomes
The project was undertaken in two stages. The first involved the compilation of industry profiles for sixteen emerging industries and was undertaken as a "desk-research" exercise. The industries selected included a mix of production-driven and market-led industries, those at different stages of the life cycle, different structures, capital intensities, etc.
Stage 2 involved the compilation and analysis of detailed information on performance, impediments to improved production and key issues for eight of the industries profiled in Section 1. A model of agricultural industry life cycle was formulated and a list of thirteen factors expected to influence the rate and direction of industry development drawn up. An interview pro-forma, designed to elicit information about the impact of each of the factors on the development of an individual industry, was developed by the researchers. For each of the selected industries a consultant, familiar with that industry, was contracted to carry out a series of structured interviews with a range of industry participants, each of whom completed the parts of the pro-forma relevant to their business activities. Each industry was analysed using the life-cycle model to determine its state of development and the impediments to its development.
The outcomes of the research were two reports, the first of which presents the industry profiles. The second includes:
- A description of the lifecycle model and the external influences and factors affecting industry development.
- Analysis of the industries studied with respect tot he factors defined and their stages of maturity.
- Summaries of the industries studied and the existing impediments to their development.
- Reports on each of the industries studied.
Publications
Greer, G., Greer, J. and Zwart, T. (2000): Industry profiles of emerging industries. Unpublished report to MAF
Greer, G., Greer, J. and Zwart, T. (2000): Impediments to growth of emerging industries. Unpublished report to MAF
3.2 ICP 502: Modelling future wood supply from New Zealand's planted production forests
| Programme Title: | Modelling future wood supply from New Zealand's planted production forests |
| Programme Leader: | Steve Wakelin |
| Institution: | New Zealand Forest Research |
Summary
The forecasts show the potential sustainable supply of wood available from New Zealand's planted production forests could rise from the current harvest of 18.3 million cubic metres in the year ended March 2000 to a little over 28 million cubic metres by 2003 and further increase to 30 million cubic metres by 2006. This increase assumes an average rotation length of 28 years for radiata pine.
In the year ended March 2000 New Zealand's total mix of forest products exports were produced from 12.1 million cubic metres of wood. With domestic demand relatively static the potential increase of up to 12 million cubic metres by 2006 would double the quantity of forestry exports New Zealand could produce.
Based on the forest estate currently planted New Zealand's long-run annual sustainable harvest should reach about 35 million cubic metres by 2020.
The volume of pruned logs is forecast to increase three-fold from 1.5 million cubic metres in 2000 to around 5 million cubic metres in 2006 assuming an average clear fell age of 28 years for radiata pine. Radiata pine makes up between 92 and 95 percent of the forecast wood supply over the forecast horizon.
Background
Until 1987, forecasts of the wood supply from New Zealand's planted production forest estate were carried out by the New Zealand Forest Service (NZFS). The first comprehensive national forestry-planning model was prepared by the NZFS for the 1969 Forestry Development Conference. In addition to supply, this model considered future demand for forestry products. The NZFS revised this model in 1972, 1976, 1981 (Elliot and Levack, 1981) and 1986 (Burrows et al, 1987). NEFD wood supply forecasts were published in 1993 and 1996.
Approach & Outcomes
The forecasts are based on modelling carried out by the New Zealand Forest Research Institute Ltd (Forest Research) using area and yield data from the NEFD database. The model assumptions and constraints were jointly developed by the Ministry or Agriculture and Forestry, Forest Research, and the NEFD Steering Committee.
This study uses six scenarios to show the outcome of a range of options on the long-term, sustainable supply of wood. Three clearfell age scenarios:
- Base cut
- Early cut
- Late cut
are based on the age of harvesting and assume no new planting.
Three new planting scenarios:
- Plant 20 000 ha/year
- Plant 40 000 ha/year
- Plant 60 000 ha/year
are based on a range of new planting levels.
The information in this report is intended to assist in resource and policy planning and in assessing processing opportunities and infrastructural requirements. It is expected that new NEFD wood supply forecasts will be produced every three to five years.
3.3 ICP 506: An understanding of current farm performance variations for Mäori-owned and non Mäori-owned farming business
| Programme Title: | An understanding of current farm performance variations for Mäori-owned and non Mäori-owned farming business |
| Programme Leader: | Peter Livingston |
| Institution: | AgFirst |
Additional work is being completed on the final report for this project and a summary is therefore unavailable for inclusion in this report. The results of this project will be included in the next Research Results report.
3.4 ICP 440: Impact of agricultural change on rural communities - phase 2
| Programme Title: | Impact of agricultural change on rural communities - phase 2 |
| Programme Leader: | Professor Richard Bedford |
| Institution: | University of Waikato |
Summary
The research reinforced key findings about rural social and economic transformation that were established during the first phase of the project. These included: the declining economic linkages between farmers and local communities; the shift towards large production units while at the same time subdivision is taking place of high-quality agricultural land on the peripheries of larger settlements, land with views and coastal blocks; the use of more labour and equipment on a contract basis; the trend towards "dependency populations" in rural areas; the differential impact on residents in rural New Zealand as a result of the contraction of a wide range of basis services; the increasing stresses placed on families as economic necessity and social changes have seen farming populations and young women participating less in voluntary work; the increasing diversity within rural populations; and a systemic trend towards relative disadvantage when aggregate statistics on a wide range of social and economic dimensions of change are compared with national averages.
Background
To provide a North Island case study to validate relationships between changes in agricultural systems and rural communities, which have been established during the first phase of the project "Impact of agricultural change on rural communities". Phase 2 of the project will explore the dynamic relationships between changes in agricultural systems and rural communities in the Central North Island between 1986 and 1996 in the wider context of demographic and economic changes in rural areas and the small towns which service these areas.
In recent years the Ministry of Agriculture and Forestry has had an active programme of operation research into the interrelated dynamics of agriculture and rural communities. The current project, as noted above, represents the second and final phase of an inquiry into the changing social and economic linkages within the rural sector associated with significant restructuring of agriculture-community linkages over the past 15 years. The second phase of the project was designed to provide perspectives on linkages that had been examined by Liepins (1998) in the Roxburgh/Teviot area in the different agricultural and community setting of the Central North Island.
Approach & Outcomes
Research was carried out at four levels:
- A national/international assessment of the critical forces driving rural economic change over the past two decades with particular reference to the impacts of globalisation and restructuring;
- A regional assessment of demographic and economic change in the Central North Island, focusing on the period 1986-1996;
- A sub-regional analysis of linkages between agriculture and rural communities in three Districts (Ruapehu, South Waikato, Whakatane) with particular reference to changes over the past 20 years;
- Community case studies, focusing particularly on Taumarunui and Tirau, exploring factors responsible for change at the local level.
This multi-level approach ensured that local, regional, national and global dimensions of the linkages under study were all kept in perspective. Researchers involved in the first phase of the project were included as consultants in the team to ensure some continuity in approach and perspective. The research methodologies included extensive literature review (see Section 2 of the report) descriptive analysis of data collected in the Censuses of Population and Dwellings (especially 1986 and 1996) and the agricultural surveys (Section 4) and 48 in-depth interviews with residents in selected communities (Section 5).
The project achieved its primary objective of providing a North Island case study to validate relationships between changes in agricultural systems and rural communities that had been established during the first phase of the project. There were some significant differences in approach adopted in the two phases, partly to ensure that a more comprehensive regional assessment was forthcoming in the North Island study. Despite these differences, a number of common core issues emerged, and these are summarised in Section 6 of the report. In both areas it was established that while economic linkages between farmers and local communities have been declining as rural populations source goods and services from larger centres, local communities remain vitally important for the social support they give families. The issue of a progressive "de-coupling" of rural communities from their agricultural hinterlands is a complex, multi-faceted one. One things that is clear from studies of agriculture-community linkages in both areas is that there have been some major changes to traditional structures of economic and social interdependency in rural New Zealand. These changes are not just the result of economic restructuring; they are also linked to long-term tendencies in rural societies throughout the advanced capitalist world.
Both phases of the project also emphasised the increasing diversity within both the farmer population and the wider rural society. There is a wide range of tertiary education skills and experience, and growing differentiation in the use of electronic technological innovations. It is likely that the business-smart and technologically innovative farmers will continue to diversify their operations, buying out neighbours and expediting a return to larger farm units. This will be occurring at the same time as lifestyle blocks are proliferating in rural areas near the larger cities, especially where high land values and rates make farming marginal compared with subdividing the land. Understanding the increasing complexity of rural social structures and demographic transformations is essential if the debate about "sustainable development" is to have much meaning in rural New Zealand.
In terms of achieving the two objectives specified for this phase of the project, it should be noted that the research went somewhat further than originally planed in the community-related work (Objective 2) and achieved less than scheduled in the regional analysis (Objective 1). The regional synthesis of data was constrained somewhat by late provision of information from the various agricultural censuses/surveys between 1986 and 1994. It has been hoped to incorporate a considerable amount of information from these censuses/surveys into a Geographic Information System, which was being developed at the Area Unit level. However, for a range of reasons it was not possible to obtain data in a form that had been standardised effectively to take account of administrative boundary changes between 1986 and 1990 (see Section 3).
Publications
Bedford, R.D., Joseph, A. and Lidgard, J.M. with the assistance of A.I. Chalmers, R. Liepins, J.E. Goodwin, B. McLaughlin, J. Newell and O. Stolte. (1999): Rural Central North Island Studies: Studies of Agriculture-Community Linkages. Report for MAF, Department of Geography, University of Waikato, 98pp.
Joseph, A.E., (1999): Toward an understanding of the interrelated dynamics of change in agriculture and rural communities. Population Studies Centre, Discussion Paper No 32, University of Waikato, Hamilton, 15pp.
Lidgard, J.M. and Joseph, A.E., (1999): A new dawn? Will the sun shine on rural New Zealand in the new millenium? In Roche, M. (ed), paper presented to Proceedings of the 19th New Zealand Geographical Society Conference, New Zealand Geographical Society, Palmerston North, 5-8 July, 1999, (forthcoming).
Stolte, O. and Lidgard, J.M., (1999a): Preliminary Report, Taumarunui and the Ruapehu District. Department of Geography, University of Waikato, Hamilton, 15pp.
Stolte, O. and Lidgard, J.M., (1999a): Preliminary Report, Tirau. University of Waikato, Hamilton, 18pp.
3.5 ICP 442: Debt & debt servicing
| Programme Title: | Debt & debt servicing |
| Programme Leader: | Roger Wilkinson |
| Institution: | Landcare Research, Lincoln |
Summary
Overall, 90 percent of farms reported some form of debt. A slightly higher percentage of cropping and dairy farms reported debt than sheep and beef, horticulture, and "other" farms.
The average farm debt (weighted over all types of farm) was $285,957 per farm. Average debt levels on dairy farms and cropping farms were more than double those on sheep and beef farms, and approximately 3 times those on horticulture and "other" farms.
About 20 percent of total debt was in the form of current liabilities. The largest source of term funds was trading/trustee banks, followed by loans from family members. The largest sources of funds for seasonal finance were bank overdrafts and revolving credit facilities. Trading and trustee banks provided 68 percent of the total funds advanced to the respondents, and family members 12 percent.
Land represented around 70 percent of the value of total assets. Dairy farms had the highest average total asset value of all farm types and horticultural farms the lowest. A substantial number of farms had equity of more than 80 percent of the value of total assets, in particular sheep and beef, horticulture, and "other" farms. Larger farms tended to have lower percentage equity than smaller farms. However, because larger farms also had lower liabilities in proportion to gross income than smaller farms (with the exception of dairying), they potentially had the ability to service their greater debt.
Average debt per farm increased by 91 percent in real terms between 1988 and 1998. Average debt on dairy farms and cropping farms increased much more than average debt on sheep and beef farms and horticultural farms. The percentage increase in farm debt between 1995 and 1998 was much smaller than that between 1988 and 1995.
Background
Landcare Research, Lincoln, was commissioned by the Ministry of Agriculture and Forestry to determine the level and structure of farm debt in New Zealand as at 1998.
The objectives of the study were:
- To provide a reliable estimate of debt levels across all farms in New Zealand, by type of farm, for the accounting year ending June 1998 (or other appropriate 1998 balance date).
- To interpret this data in the context of assets owned on the same farms.
- To compare current debt levels with debt levels in 1995.
- To compare current levels with those measured in an earlier survey conducted in 1988.
Approach & Outcomes
We surveyed 881 farms in five sectors (sheep and beef, dairy, horticulture, cropping, and "other" types).
3.6 ICP 443: East Coast North Island Farm business survey
| Programme Title: | East Coast North Island Farm business survey |
| Programme Leader: | Rob Hayes |
| Institution: | AgFirst Consultants Gisborne Ltd |
Summary
There were a number of common factors between the European and Mäori respondents. The keys ones were:
- The two most important goals/objectives were profitability and low debt.
- Low profitability and weather were the two main difficulties to farming in the last three years.
- Fertiliser and fencing were the two main priorities for any extra money.
- The majority of respondents (60 percent) had 20 years or more experience in farm management and decision making.
The significant differences between the European and Mäori respondents were education, farm structure, farm size, farm development, livestock performance and the large gap in financial performance. Mäori farms had a huge potential to lift performance.
Background
Both AgFirst Consultants and MAF Policy recognise the need for a specific focus and input into improving the performance of Mäori farms in the Gisborne/Wairoa district. To be effective in helping farmers this input should be based on facts relating to the current situation on farms.
Approach & Outcomes
The questionnaire used in the survey was prepared by MAF Policy with input from AgFirst Consultants. It was posted by AgFirst to a sample of Mäori and European farmers in August 1999. Farmers were encouraged to participate through phone calls and follow-up visits. Where farm accounts were provided, the identities of the farmers were kept confidential and only aggregated data has been provided by MAF Policy.
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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